Indians love Chinese smartphones, but over the past two months, New Delhi has stepped up scrutiny from top three Chinese firms – Xiaomi, Vivo and Oppo. Together, these companies control more than 60% of the Indian smartphone market, according to research firm Counterpoint.
At the time, Xiaomi India stated that “all of our operations strictly comply with local laws and regulations.” CNN Business did not respond to further requests for comment this week.
A Vivo spokesperson told CNN Business that the company is “working with the authorities to provide them with all the information they need.” He also did not respond to an additional request.
Oppo did not respond to a request for comment.
Meanwhile, Beijing has criticized the raids on Chinese companies, saying India is damaging its reputation among foreign investors.
In a statement earlier this month, the Chinese Embassy in India said the investigations were disrupting “normal business activity” and undermining “the confidence and willingness of market actors from other countries, including Chinese businesses, to invest and operate in India.”
Why is India cracking down
Chinese tech companies have had a particularly hard time in India over the past two years, with New Delhi cracking down as border tensions between the world’s most populous countries escalated.
Chinese suppliers have also come under the heel of Indian regulators because “they have grown very quickly,” said Tarun Pathak, director of research at Counterpoint.
“India is seeking more clarity on how Chinese firms do business here,” he said. “Their balance sheets are being studied now.”
He added that the Indian government is tightening the rules on foreign handset manufacturers because they have realized that “these companies need India more than India needs them.”
While regulatory repression is making it hard to do business in India, experts say it’s unlikely.
“Chinese firms will stay here,” Pathak said, adding that “there are no other buyers.”
Kiranjit Kaur, deputy director of research at International Data Corporation (IDC), also expects these companies to recover by the time India’s shopping-driven Diwali festival season kicks off in October. She added that these studies are unlikely to be relevant to Indian consumers.
After the clashes at the border, calls for a boycott of Chinese companies, including phone makers, gripped India, Kaur recalls.
Chinese phones are not going anywhere
She added that, despite these protests, the volume of supply of these companies has not changed, and they continued to dominate the market.
India’s love for Chinese smartphones transcends any political tension, mainly because they are considered very valuable in a highly price-sensitive market.
“In terms of features, Chinese smartphones offer a lot more and only cost a little more,” Kaur said.
And despite new legal challenges, China cannot afford to abandon the Indian market. The South Asian country of over 1.3 billion people is the second largest smartphone market in the world after China, according to Counterpoint’s Pathak.
“India is very important for all the big players, whether American or Chinese,” he said. He also added that it is the world’s largest “emerging market” as “nearly half of the country is still not connected to smartphones.”